What the letter means
IRC 6672(b)(1) bars the penalty unless the IRS first notifies the person in writing, by mail to the last known address or in person, that the person will be subject to an assessment. Letter 1153 is that notice. The IRS Appeals page describes it: the letter “explains that the IRS’s efforts to collect the federal employment or excise taxes due from the business named on the letter have not resulted in full payment of the liability. Therefore, the IRS proposes to assess a penalty against you.”
The enclosed Form 2751 lists each period and the proposed penalty. Signing Part 1 agrees to assessment. The IRM cautions revenue officers not to treat a signed Form 2751 as final too soon: “Do not treat the signed Form 2751 as a conclusive waiver until the 60 or 75-day restriction period (plus five additional days) expires, as a responsible person may change their mind.”
Why the client got it
A revenue officer investigated who was responsible for collecting, accounting for and paying the business's trust fund taxes and who willfully failed to do so. The investigation usually includes an interview recorded on Form 4180. IRM 5.7.4.2.4 is specific about that form: “Do not give or mail Form 4180 to the potentially responsible person(s) or representative for completion by that person or for review prior to the interview.” It must be completed in person or by phone. The legal standards (responsibility and willfulness) are on the trust fund recovery penalty page.
Before the letter goes out, IRM 5.7.4.7 requires approval: “Once Form 4183 is approved by the GM, the RO can issue Letter 1153. Do not issue Letter 1153 before GM approval of Form 4183.” The letter and Form 2751 are hand delivered or sent certified mail, return receipt requested, to the responsible person within 20 calendar days of approval.
Deadlines and what happens if they pass
| Clock | Rule | Source |
|---|---|---|
| Protest window | 60 days from mailing or personal delivery; 75 days if addressed outside the U.S. | IRC 6672(b)(2); IRM 8.25.1.4 |
| Timeliness | A protest mailed on or before the 60th (or 75th) day is timely | IRM 8.25.1.4 |
| Earliest notice and demand | After 60 (or 75) days plus five days for receipt and processing of timely mailed protests | IRM 5.7.4.7 |
| Assessment statute | Does not expire before 90 days after the letter, or 30 days after Appeals' final determination if a timely protest is filed | IRC 6672(b)(3); IRM 8.25.1.5.2 |
IRM 8.25.1.4: “A TBOR2 protest is considered timely if it is mailed on or before the 60th day (75th if outside of the United States), i.e., timely mailed is timely filed.” If the window closes with no protest, the IRS assesses the penalty and issues notice and demand. The pre-assessment Appeals hearing is then gone, and any challenge has to use post-assessment procedures. An untimely protest does not suspend the assessment statute; Appeals closes such cases noting “Due to untimely protest, the ASED is not suspended by TBOR2.”
How to respond
- Calendar the 60th day from the mailing or delivery date (use the certified mail date if mailed). Mail the protest with proof of mailing.
- Get authorization. A Form 2848 for the individual covering the penalty and the periods on the letter, separate from any authorization for the business.
- Choose the protest type. IRM 8.25.2.3.3.2: “A Small Case Request is appropriate if the total amount of tax, penalties and interest for each period is $25,000 or less. If more than one tax period is involved and any tax period exceeds the $25,000 threshold, a Formal Written Protest for all periods must be filed.”
- Include every element. For a formal written protest, IRM 8.25.2.3.3.2.2 lists: a letter requesting an Appeals conference sent to the Person to Contact on the letter; name, address and SSN; a copy of Letter 1153 or its date and number; the periods protested; the disputed issues and reasons; dates and amounts of disputed payments; specific dates, names, amounts and locations supporting the position; “a clear explanation of the taxpayer’s duties and responsibilities, specifically the duty and authority to collect, account for and pay the trust fund taxes”; and a penalties of perjury declaration. A representative who prepares the protest substitutes a declaration stating whether he or she knows personally that the facts are true.
- For a small case request, send a letter to the Person to Contact requesting a conference, with the disputed issues, the reasons, disputed payments and the explanation of duties. IRM 8.25.2.3.3.2.1 says to submit two copies.
- Watch the business account. IRM 5.7.4.7 addresses what happens when the business or a responsible person pays the trust fund liability in full after the letter issues; track payments so the proposed amounts stay current. See revenue officers.
Appeals procedures for TFRP cases, including Fast Track Mediation for collection cases, are discussed on the Appeals overview. For a protest written from a template, adapt the formal protest template to the TFRP elements above.
What the IRS does next
A timely protest goes to Appeals before assessment. IRM 8.25.2.3.3.2.2 notes “Collection will send a taxpayer’s case to Appeals, even if the taxpayer fails to perfect the protest.” If the revenue officer later decides a period should not be asserted, the IRS sends Letter 1153-W to rescind it. If the proposed amount increases before assessment, IRM 5.7.4.7.1 requires a new Letter 1153 and Form 2751 for the affected periods; timeliness for unaffected periods stays tied to the original letter. After assessment, the TFRP is collected like other assessed liabilities; see CDP hearings for the rights that attach to later lien and levy notices.
Related notices
- CP161 and later balance due notices to the business for the underlying employment taxes.
- CP215: civil penalty notice and demand, issued after assessment.
- Letter 3172: lien filing notice, which can follow an assessed TFRP.
- For businesses that withheld backup withholding and did not pay it over, see the TFRP and backup withholding guide on TIN Compliance.
Questions practitioners ask
Is the 60-day deadline firm?
It is statutory (IRC 6672(b)(2)) and the IRS treats a protest mailed by the 60th day (75th outside the U.S.) as timely. Ask the revenue officer early if more time is needed for a complete protest, but do not rely on an extension.
Should the client sign Form 2751?
Signing agrees to assessment for the listed periods. It is the client's decision; it gives up the pre-assessment Appeals hearing for those periods. The IRS does not treat the signature as conclusive until the protest period ends.
Can the representative fill out Form 4180 for the client?
No. IRM 5.7.4.2.4 says the form is not given or mailed for completion; it is completed in an interview, in person or by phone.
What does a protest do to the statute?
If timely, the assessment period does not expire before 30 days after Appeals' final determination (IRC 6672(b)(3)(B)). If untimely, Appeals notes that the statute is not suspended.
Is Appeals available after assessment?
The statute builds the Appeals opportunity into the 60-day preliminary notice period. Once the penalty is assessed without a timely protest, that pre-assessment hearing is no longer available, and any challenge has to use post-assessment procedures.